BUS705: Impact of Environmental Forces on Tesla's Innovation and CSR

This report provides a comprehensive analysis of Tesla's corporate social responsibility (CSR) and its innovative responses to environmental forces. It begins by highlighting Tesla's commitment to clean energy and its innovative products, such as lithium-ion batteries and electric vehicles, while acknowledging the environmental impact of its operations, including emissions and waste generation. The report explores the sources of ideas driving Tesla's innovation, emphasizing the role of industrial and market changes, government regulations, and public awareness of environmental issues. It then examines Tesla's CSR challenges, including the need for improved waste management, employee safety, and sustainable practices. The report delves into the application of strategic innovation models, particularly waste management techniques, and the use of decision-making models to address these challenges. It highlights the importance of leadership in fostering innovative responses, specifically the adoption of a transformational leadership style to encourage employee participation and adapt to changes. The report concludes by discussing the formulation and implementation of innovative strategies, including closed-loop recycling and the establishment of incentives for customers to return end-of-life vehicles, with the ultimate goal of achieving 'Zero waste' by 2025. It also emphasizes the need for effective communication, motivation, and training to successfully implement these changes.

BUS705

Impact of Environmental Forces
on Innovative Response
The blog brings out a discussion on corporate social responsibility and sustainability of Tesla.
To prevent environment impact created by the Tesla products, Tesla applies their ideas and
other creative and innovative solution to resolve Environmental issues (Ellingsen, Singh, and
Strømman, 2016). Tesla is an American electric company which is engaged in the facilitation
of clean energy company based in California. The company was founded in 2003 in energy
storage, energy production, and automotive sector. The organisation specialises in the
production of electric vehicle and battery-based storage from grid scale and energy storage
through the SolarCity subsidiaries, solar roof tile, and solar panel. Tesla sells Model X,
Model S, and deals in powerpack, Powerwall, megapack, and solar roof tiles. In 2018, the
company has the employee base of 45000 people (Tesla, 2018). Tesla is considered as one of
the innovative companies that focuses upon tackling of climate change and have made the
sustainable practices through the safety and innovation. Lithium-ion batteries are the
innovative energy saving product of the company which is innovative and environmentally
sustainable (MWS, 2018).
Corporate social responsibility and industry challenge of Tesla
CSR is self-regulating business model, which helps the organisation to become accountably
responsible towards the stakeholders and public. It refers to the integration of environmental
and social objectives in business operations. Common role of CSR will include assisting
control costs, enhancement of the organisational brand, and attraction that will facilitate long-
term success of the company. It is true that majority of the environmental impact comes from
automobile sector (nearly 80-90 percent) due to fuel consumption and Co2 emissions of the
greenhouse gases and air pollution driving global warming. Although, according to USA

today, 2018, it is seen that Tesla is among the top 10 automobile organisations, which operate
on the basis of eco-friendly feature (MWS, 2018).
Recently, Tesla has started manufacturing electric cars, which relies on electricity as being
generated through Fossil energy generating pollution and nuclear power. The adoption rate of
cleaner renewable electricity further has increased since 2007, which has continued to drop.
Possible increasing emissions caused with the fact that most of the electric cars do have
heavy battery. Recently, the company was penalised due to its excessive emissions, which
means electric vehicle contributing to environment issue. 99.8 percent of the chemicals are
now contaminated with the toxic chemicals. Manufacturing of the electric vehicles generates
maximum carbon rather than creating conventional cars (Ellingsen, Singh, and Strømman,
2016).
Source of ideas affecting the development of creative/innovative solution
The major source of ideas, which induces in the development of innovative solution covers
industrial and market change. Further, there is a governmental upsurge of needs of companies
to maintain and accomplish appropriate environment. Increasing pollution and other
environmental issues from the automobile industry. Widespread adoption of electric cars
indicates that E-waste is more hazardous as compared to general waste, which is not recycled.
Tesla is quite inefficient in using raw materials where 40 percent of the raw materials is being
scrapped. From the media releases, it is seen that the Tesla sacrifices the safety concern of its
workers in name of production speed. On the other hand, the concern of tesla is in working
on infrastructure such as charging stations, better roads for the autonomous vehicles,
renewable energy grids, sustainable in regards to the capacity, widespread car sharing, battery
recycling networks (Hawkins, Gausen, and Strømman, 2012). The company will have to use
disruptive method of innovation strategy so that it can change the strategies and implement
new strategies to improve the performance of Tesla in relation to sustainability.

These above projects suggest that these projects will need millions of dollars to execute and
they will not recognise it as sustainable (Ellingsen, Singh, and Strømman, 2016). Tesla
urgently needs to focus on EPA (environment Protection Act) and its regulations to be
complied. Furthermore, Tesla will have to focus on developing campaigns so that it can focus
on improving environment rather than focusing on establishing electric socket to avail cars to
charge it. To change and develop several models in reaching sustainability, so that it can
apply and change its approach to become more sustainable rather than only becoming
profitable. It is seen that with new manufacturing procedure, Tesla has been facing high scrap
rates. The cost management department perceives that Model 3 increases after the costs begin
to fall from the elevated scrap. For the last four years, it is seen that it has suffered from
expensive robots and halted production. These losses have shaken shareholders base.
Application of strategic innovative model
Strategic innovation approach is a systematic approach through which the organization can
reach sustainability. It is an approach, which will lead to discontinuation of innovations that
are already applied, innovating new product and applying a strategic approach through
environmental campaigns. The company generates a portfolio of activities through which it
can lead to business growth opportunities by using a creative procedure. The company will
have to apply waste management techniques because the company throws 40 percent of the
raw material scrap as waste. Business insider has reported that Tesla scrap (40 percent) is not
at all appropriate by manufacturing 1 lakh cars. The company has to gather insights with
ideas from organisations and represent through organisation suppliers, advertising, packaging
partners, and branding agency (Frey, 2018). The technique used by the Tesla is waste
management technique, through which the company will be able to improve its method of
production and also enhance the work life of the employees by considering their safety
issues.

Waste management techniques are needed to manage innovation so that it can become more
sustainable. The luxury automobile industry has been emerging as mature industry, which
traditionally focus on high quality of design, manufacturing enabled with prestige marketing.
It is above the average cost of sales component, which indicates that it must lead to lucrative
cost saving opportunities because net profit margin generates is nearly less than 7 percent
(Ellingsen, Singh, and Strømman, 2016).
Source: (Berggreen, 2018)
The company has to become self-sufficient so that it can use other practises to manage its raw
materials efficiently. The first strategy is to practise closed loop recycling, which is a self-
sufficient recycling procedure by using recyclable materials, which maintain quality through
the recycling procedure. Closed loop recycling is preferred, as it will allow the raw materials
to recycle back. Luxury automakers can come up with establish programs, which is
proactively collect vehicles from the end users and recycle them. It is usually on customers to

contact and locate collection centre by creating inconvenience to the customers. Tesla can
establish incentives for the customers while returning by end-of-life vehicles directly. This
method had closed the loop recycling where it directly extracts and re-manufacture in new
vehicles. While formulating and implementation procedure, the company will aim to
proclaim “Zero waste” by 2025. By recycling most of the operations, the residents will
segregate the waste in several categories. Furthermore, there is one more reason why the
company is not sustainable is due to low vehicle production with maximum waste generation
and safety issues related to employee`s health (Kolodny, 2018).
(Source: Tesla, 2018)

Use of Decision-making Model
Innovative changes planned by the management of Tesla Motors is suitable to increase the
level of sustainability in the production of the cars, selling it to the target market ad earning
the profitable outcomes form the supply (Winkelhake, 2019). Planned change is not easily
applicable in the management but many issues are associated with the innovation, hence
managers of Tesla Motors deciding to focus effective waste management in their
manufacturing process, is potential to success but many challenges are associated with it
(Mittal, 2015). For innovative response, rational decision-making model can be used through
the proper searching of the alternative courses of action that will support the innovative
response and making a planned change.
Challenges with the innovation
The stakeholders like shareholders, community and many other organisations welcome
change in the production as effective waste management because this step was profitable for
the sustainable development of the organisational production. In addition, this change was
focused to increase the sustainability in the organisation but employees engaged in the
organisation, faced issue with the implication of the changes and innovation because of their
fear to the outcomes form the change and a change in their routine activities due to the
innovation (Hein et al., 2019). These challenges can be overcome by the rational decision
making in which the decision can be initiated through the logical analysis of the alternatives
for the innovative response.
Leadership Approach for Innovative Response
This innovative response can be handled through the leadership approach which can also be
helpful in meeting the challenges. As the organisational safety and employee, welfare is not

much focused in the organisation hence leaders need to select most appropriate leadership for
the employees to encourage their participation in the innovation (Hein et al., 2019).
Leadership style selection is a challenging task for a leader because overall development of
the employees and result of the leadership depend over the style a leader select to motivate
the employees to adapt the change and lead the organisation towards the success. Change
selected by the management of the Tesla motors is about the effective management of the
waste in its production and manufacturing of the cars. Most appropriate leadership style here
will be transformative leadership style (Kolodny, 2018).
Transformative leadership style is the effective leadership in an automobile industry, because
a technology driven industry face rapid changes hence transforming according the changes is
special feature of transformative leadership style (WADE, 2018). A transformational leader
has skills to bring all employees together over same concept and transform them to lead the
organisation on the competitive advantages of the organisation. Leaders in transformation
lead the employees with some effective skills as if they keep their attitude ad ego aside and
take their leadership as serious responsibility towards management and employees, these
leaders are self-motivated and directed in a proper direction. They are always supporting the
strategies with the demo plan to handle the challenges to the employees quickly according the
required change in the situation (Winkelhake, 2019).
Effective application of leadership in Tesla Motors
Transformational leader in the Tesla Motors has to face several issues prevailing in the
organisation regarding the behaviour of the management towards the employees and lack of
emotional attachment between the employees (Zero waste Scotland, 2018). Effective
communication with the revert back freedom to the employees is helpful for the leaders to
discuss about the issues employees face in the working and this communication is also

profitable for the leaders to get suggestion form the employees to solve the issue and
implement the change in more effective manner (Tesla, 2018).
Tesla Motors can hire leaders who are able to motivate the employees on the base of their
sentiments, employees have their attraction with the success, and failure of the organisation
and any change in the organisation is very important hence leaders need to communicate the
aspect of the change in the organisation as well as on the employees both. Profitable
outcomes of the change can motivate the employees for the effective involvement (Zero
waste scotland, 2018).
Source: (Vermeulen, 2017)
Training and development sessions can help the leaders of Tesla Motors to train the
employees about the practices useful in the change. For example, sometimes planning got
filed but an effective leader is always ready with the plan B to support the employees and it
use the negative result of Plan A to lead the employs about issues in the changes (Zero waste
scotland, 2018). Hence, transforming employees with effective communication, motivation,

and training is part of transformative leadership style. Tesla Motors can use this leadership to
implement the waste management innovation in the organisation (Tesla, 2018).
Formulation and implementation of innovative approach to succeed
Formulation of innovation strategy has been elaborated in application of innovation strategy.
There will be implementation procedure by developing steps towards innovation strategy.
The first step will consider determination of objectives and other strategic approach towards
the innovation strategy (Hawkins, Gausen, and Strømman, 2012). Detailed analysis and
effective implementation of innovative strategy will include a procedure of ensuring whether
employees are aware of information related to environmental issues, which Tesla has been
facing. Realising the changes, which they have to implement can be executed through
training the employees that can help them to improve the production procedure (Mittal,
2015).
The next step will consider knowing market by considering competitors and customers.
Defining the value proposition. Further, it will lead to assessment and development of core
capabilities. Further, tesla will establish innovation techniques and tools, which it has already
formulated “E-waste management.” The phase of innovation will include innovation
procedure, collection of innovation potentials, evaluate the ideas and derivation of ideas.
Tesla implements disruptive method to improve the sustainable situation of Tesla (Hawkins,
Gausen, and Strømman, 2012).

(Source: MWS, 2018)
From the above discussion, it is seen that organisations have been ensuring competitive with
the help of innovation strategy. The implementation of innovation strategy is quite necessary
in the formulation of innovation strategy. The strategy brings out to implement waste-
management techniques by analysing internal environment. The core effort of organisation
will also include measures that can prevent employees and bring several campaigns to ensure
the safety of employees. Ensuring innovative strategy will have to change the organisational
structure to implement the changes. It will avail data, information regarding staff as the
company has been growing, and implementing transformational leadership to make the
innovation strategy most effective. It will ensure the safety issues which will certainly
motivate the employees to work well.

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